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December 28, 2017

The Three Must-Haves for an Effective Formulary Strategy in 2018

Trying to effectively manage healthcare costs can be like trying to solve a difficult mathematical equation, and many payers struggle to find the answer. This is especially true with rising drug costs that are predicted to continue their upward trajectory, increasing 6.4% annually.[1] The formulary has long been seen as a primary solution to controlling rising drug costs, but not all formularies deliver and more exclusions do not always equal better outcomes. It is essential to balance clinical effectiveness, economic impact and member experience.

Our formularies use a value-based approach to provide guidance to our clients and their members on what medications are the safest, most clinically appropriate and cost effective options. We recently completed a deliberate and thoughtful process to update our formularies. Starting January 1, 2018, EnvisionRx formularies will update tiers, exclusions and step therapies to create cost savings and provide access to additional medications with little member disruption. Our Select formulary will increase from 115 exclusions to 125. The Standard formulary, offering an option with less exclusions, will increase from 55 to 60 exclusions. Our Select formulary is the most cost effective and can provide up to 8% savings on overall drug spend as compared to non-exclusionary formularies, with minimal member disruption.

Every year, as the drug landscape evolves, we make formulary updates in order to maximize plan performance, ensure use of the lowest cost medications and provide additional savings to our clients. While the trend is to exclude high-cost medications, we realize there is more to consider than just drug costs. That is why we use a value-based approach in our formulary development process and carefully consider clinical effectiveness, economic impact and member experience. This allows us to curb overall drug spend in the long run, as well as year-over-year drug inflation, while providing clinically effective products across therapeutic classes with little member disruption.

#1 Clinical Effectiveness

We evaluate medications for treatment efficacy, ensuring that for any exclusions there are clinically effective alternatives. Other PBMs have more exclusions on their formularies than we have, however, we believe some drugs should remain on formulary because of their significant clinical impact despite their high cost.

As an example, Victoza® (GLP-1 drug class) has proven cardiovascular benefits for diabetes patients. This is important because people with this condition are two to four times more likely to have a heart attack or stroke than people without diabetes.[2] Victoza is one of the only medications in its class to offer cardiovascular benefits, yet because of the high cost, some have excluded it on their formulary. However, should the patient have a heart attack or stroke, the costs for that treatment for just one year far outweighs the costs of the preventative yet pricey Victoza.

#2 Economic Impact

The ultimate goal of our formulary approach is to control costs while simultaneously improving health outcomes; therefore, we want to ensure maximum savings and rebates are achieved. This is necessary as some manufacturers will offer higher rebates to offset cost increases; however, some drugs with higher rebates should still be left off formularies because of the much lower cost alternatives available. Take for example, Glumetza® with a cost of $134 per tablet. Glumetza is excluded because Metformin offers the same clinical benefits for only $0.01 per tablet, making it a preferred option.

Through our price protection agreements with pharmaceutical manufacturers, also known as cost-cap, we protect our clients from the full impact of year-over-year increases in the cost of highly utilized brand products. This service protects clients from drug price inflation and delivers consistency in total expected drug spend at no additional cost.

#3 Member Experience

Adding exclusions to a formulary can cause disruption to members if a medication they’ve been taking is no longer covered on the formulary. That is why we take the member experience into account when developing our formularies, ensuring minimal disruption, allowing grace fills, offering clinically effective alternatives, and providing continual communications to the member and provider to help with the adjustment. For complex conditions that can be difficult to stabilize, such as cancer, multiple sclerosis and rheumatoid arthritis, we will grandfather, or cover, medications that are already working for existing patients.

We look at our book of business to determine the member disruption. As an example, with one in 11 Americans affected by diabetes, medication changes for this disease could have a profound impact on member experience. SGLT-2 inhibitors are oral diabetes medications that have proven effective for diabetic patients with heart disease, but there are numerous brands available, all with equal clinical effectiveness. A review of our book-of-business data showed that Invokana® was by far the most popular drug in this class. By making this a preferred drug in our formulary, we significantly lower member disruption. Evolving market dynamics also allowed us to renegotiate rebates and provide an all-time-low net cost, saving 24% year over year.

Our Proven Process

With all of these things to consider when updating the formulary, it’s essential to have a proven process. We utilize three committees to provide a system of checks and balances.

The P&T committee includes independent, external clinicians representing a variety of specialties. The committee meets quarterly to review medications and annually proposes formulary updates for the following year. They utilize the information and recommendations provided by the ECRC to determine drug coverage requirements, whether a medication should be included, excluded, optional or if there’s insufficient evidence to add it to the formulary.

It is then the task of the Envision Value Review Committee (EVRC) to balance the economic impact and member experience with the recommendations provided. This group of Envision employees representing stakeholders from various departments, makes the final decisions regarding the formulary within clinical guidelines established by the P&T committee.

Only Part of the Equation: A Comprehensive Approach to Pharmacy Benefits

A comprehensive formulary approach includes programs to help control costs while ensuring appropriate access. In addition to our thoughtful formularies, we offer clients other programs to save on prescription costs, such as our Non-Essential Drug (NED) program. The NED program adds an extra layer of protection by blocking drugs that are high-cost new formulations of existing medications, providing little clinical value over lower cost alternatives. Together with our updated 2018 formularies we can offer clients and their members the most clinically effective, economically sound pharmacy care experience.

For more information on our formularies or savings programs, contact your account manager, or for a list of drugs covered in our formularies, click here.

[1] Pembroke Consulting analysis of National Health Expenditure Accounts, Office of the Actuary in the Centers for Medicare & Medicaid Services, July 2015. Published on Drug Channels (www.DrugChannels.net)